Sabeer Bhatia mentioned that as a small company, receiving an offer from a giant like Microsoft so quickly was a big deal for them. They had scraped together capital from various sources to build the company.
Email has revolutionised the way we communicate, and today, most of us use Google's Gmail for our email needs. However, Yahoo and Outlook.com have also been major players in this space. Outlook.com, originally known as Hotmail, has an interesting backstory. Hotmail was created by an Indian entrepreneur named Sabeer Bhatia. Along with his partner Jack Smith, Sabeer Bhatia founded Hotmail in 1996. Just 18 months later, in 1997, tech giant Microsoft acquired Hotmail for $400 million. For Bhatia, this deal was a dream come true.
From a $140 Million Offer to a $400 Million Deal
Sabeer Bhatia recently shared some fascinating stories about Hotmail during a podcast. He mentioned that as a small company, receiving an offer from a giant like Microsoft so quickly was a big deal for them. They had scraped together capital from various sources to build the company. Although they knew Hotmail had the potential to grow significantly, at that time, they were not generating any revenue. Bhatia noted that if they had rejected Microsoft's offer, they would have faced major challenges, as Microsoft could have easily created a similar product on its own. Initially, Microsoft offered just $140 million, but after several months of negotiations, the deal was finalized at $400 million.
Hotmail’s Launch in 1996 by Sabeer Bhatia and Jack Smith
Sabeer Bhatia and Jack Smith launched Hotmail on July 4, 1996. Around the same time, another service called RocketMail was also launched, which later became Yahoo! Mail. Back then, the free storage limit for users was only 2 MB. Hotmail received its initial funding from venture capital firm Draper Fisher Jurvetson. By December 1997, Hotmail had gained 8.5 million users. Before founding Hotmail, Sabeer Bhatia had worked briefly with Apple Computers.
Multiple Ventures, But No Repeat of Hotmail's Success
After Microsoft acquired Hotmail, Bhatia continued working at Microsoft for nearly a year. He then left to start an e-commerce company called Arzoo Inc. He also founded JaxtrSMS, a messaging service. Despite these ventures, Bhatia was unable to replicate the success of Hotmail. On the other hand, Hotmail's co-founder Jack Smith has been the CEO of software company Proximex since 2007.
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 "Sabeer Bhatia")
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